Official FCC Blog

February, 2013

Please provide comments to the issue below as part of the 2012 WCB cost model virtual workshop for inclusion in the record. Comments are moderated for conformity to the workshop’s guidelines.

Background

The Commission previously adopted a unitary rate of return for all incumbent LECs – regardless of size – when such carriers were operating as regulated monopolies. Since that time, Congress enacted the 1996 Act, technology changes have introduced alternatives to the incumbent’s service, and most of the larger incumbent LECs have moved to price cap regulation.

Hybrid Cost Proxy Model: The authorized federal rate of return has been 11.25 percent since January 1, 1991. HCPM utilizes the authorized rate of return. When establishing criteria to ensure consistency in the calculations of federal universal service support, the Commission concluded that the authorized federal rate of return on interstate services would be a “reasonable rate of return by which to determine forward looking costs.”

Today the United States is recognized as a leader in mobile technology, including commercial deployments of LTE and development of mobile operating systems. This leadership depends on our continuing to make additional spectrum available for licensed mobile broadband and unlicensed uses, particularly as other countries are also focused on making additional broadband spectrum available.

Today we are releasing a white paper that compiles information on the status of licensed and unlicensed spectrum resources in the United States and selected countries around the globe, which also realize the importance of additional mobile broadband spectrum, and are taking steps to make more available. The countries selected for this analysis were based in part on data availability. Future updates of the paper may include additional countries. Fueled by the skyrocketing demand for mobile data services, there has been a lot of interest in understanding what spectrum is available for mobile broadband networks around the world, and how the situation in the United States compares to other countries. While much information about global spectrum resources is publicly available, getting a complete grasp of the spectrum availability picture around the globe can be daunting. Various conditions and unique issues often arise regarding different frequency bands in individual countries: for example, frequencies may be available, but only for use in certain geographic areas; or there may be restrictions on spectrum use. In addition, different sources may use different definitions, so a frequency band might be considered “currently available” according to one source but not another, resulting in different bottom lines.

As we all know, technology is evolving at an amazing pace, changing what we do, and how we do it, in almost every sphere of life. Mostly, this means exciting progress, since new tasks can be done that were not possible before, or traditional tasks can be done with less time and cost.

Unfortunately, however, history has shown that access to new technology often lags behind for people with disabilities. Those of us with a disability are not deliberately excluded from the benefits of new technology. Rather, accessibility is generally not on the radar screen when inventors are racing to create new products ahead of their competitors.

An ironic result of this dynamic is that people with disabilities can be more isolated from their peers if technological advancements do not consider their needs. For example, I personally experienced an inadvertent, major setback from technological change in the 1990s when office computers quickly switched from the text-based interface of DOS to the graphical user interface of Windows, for which there were no viable screen readers at the time.

Potential for Equalizing Opportunities

A different result is possible because most contemporary technologies have software at their core. Software is not fixed and inflexible, but malleable and adaptable. It can be made to do almost anything that the human mind can conceive. That includes being responsive to particular needs and abilities, supporting alternative means of input or output, thereby increasing their usability for everyone.

I took the opportunity in a recent speech to discuss the concept of “more” within the context of the FCC’s mobile broadband agenda – our focus on getting more broadband to more people in more places – while continuing to foster a robust, competitive marketplace. Recent data suggests that wireless data consumption will grow 9-fold over the next four years. We are working hard to meet the spectrum challenges this growth presents. The full text of my speech and slides (which include some compelling data), as presented at a Broadband Breakfast Club event hosted by BroadbandBreakfast.com on Tuesday February 19, 2013, are below:

Good morning, everyone. Thank you to the organizer of this event, Sylvia Syracuse, for inviting me to speak, and to all of you for coming out to discuss such an interesting set of topics.

I hope people enjoyed the three-day weekend. After the Downton Abbey finale, I know many of us needed that recovery day.

I appreciate the opportunity to share what the FCC has been and will be doing to make mobile broadband available to all Americans and to facilitate a robust mobile wireless marketplace.

Mobileis an enormous driver of innovation and economic growth – it comes as no surprise to anyone here that our use of, and the need for, mobile data is growing by leaps and bounds. The National Broadband Plan in 2010 identified the spectrum gap driven by rapid growth of mobile broadband use, and that growth has only continued. Cisco’s recently updated Visual Networking Index Mobile Data Traffic Forecast – a very rich and interesting report – predicts that U.S. mobile data traffic will increase nine-fold within the next four years.

Please provide comments to the issue below as part of the 2012 WCB cost model virtual workshop for inclusion in the record. Comments are moderated for conformity to the workshop’s guidelines.

Background

The USF/ICC Transformation Order requires price cap carriers that accept the state-level commitment for universal service support under Connect America Phase II to offer broadband at speeds of 4 Mbps/1 Mbps to all supported locations and at least speeds of 6 Mbps/1.5 Mbps to a number of supported locations by the end of the fifth year. The Commission directed the Wireline Competition Bureau to design the forward-looking cost model so that it ensures that the “most locations possible” receive broadband at speed of 6 Mbps/1.5 Mbps or greater at the end of the five year term.

Please provide comments to the issue below as part of the 2012 WCB cost model virtual workshop for inclusion in the record. Comments are moderated for conformity to the workshop’s guidelines.

Background

The second version of the Connect America Cost Model (CACM v2.0) has defined inputs for specified hardware associated with a fiber-to-the-premises (FTTP) network, such as optical network terminal units, fiber drop terminals, fiber splitters, and optical line terminal equipment, as shown in CostQuest’s Oct. 19, 2012 ex parte filing.

Questions for Comment

Does CACM v2.0 make appropriate assumptions about the types of hardware that are needed for a FTTP architecture? Are there other types of hardware that should be added, or some types of hardware that should not be included, when the Bureau adopts the final version of the model?

Are the individual input values that CACM v2.0 identifies for each specified category of hardware or infrastructure reasonable? Should the Bureau use these input values when it adopts the final version of the CACM?

Please provide comments to the issue below as part of the 2012 WCB cost model virtual workshop for inclusion in the record. Comments are moderated for conformity to the workshop’s guidelines.

Background

The second version of the Connect America Cost Model (CACM v2.0) assumes an average federal corporate income tax rate of 34 percent and an average state corporate income tax rate of 5.3 percent. Parties who have signed the Third Supplemental Protective Order may view how these income tax values are used in CACM v2.0 by accessing the model, selecting the “Posted Data Sets” option, and visiting the “Capital Cost Inputs” tab of the “CQCapCostForCACM” capital cost model.

For property taxes, CACM v2.0 uses a set of state-specific factors that are applied to general and administrative (G&A) costs, which are calculated as an operating expense. G&A costs include property tax. The factors are designed to reflect the difference in property tax rates across the states, based on information obtained from Duff & Phelps, LLC, a large national company that handles property tax assessments for telecommunications carriers. The state-specific factors are applied against the G&A costs, which are calculated as an operating expense. Parties who have signed the Third Supplemental Protective Order may view the state-specific factors by accessing the model, selecting the “Posted Data Sets” option, and visiting the “Ptax V3” table in the “Inputs Collection.” To see how CACM applies the state-specific property tax factors, these parties may select the “Posted Data Sets” option and visit the “Telco Opex” tab of the “OpexV4” table in the “Inputs Collection.”

As of last summer, more than 55% of U.S. wireless consumers had smartphones, up from 16% in 2009. The iPad launched less than three years ago; today, more than one third of consumers have a tablet or e-reader. And half of all adults under 35 now live in households without wireline phone service. The ways we share and exchange information are changing fast, driving tremendous benefits for consumers and businesses throughout the country.

At the FCC, we're working to make sure our policies keep pace with this rapidly evolving communications landscape. Faced with major technology transitions -- from narrowband to broadband; from time-division multiplexing (TDM) to Internet Protocol (IP); from copper to fiber; from only wireline services to greater use of wireless -- we're focused on accelerating these trends and carrying out Congress's directives to serve the public interest in this dynamic, innovative sector. Over the past few years the FCC has made significant progress toward those goals, including developing the country’s first National Broadband Plan, overhauling the Universal Service Fund from voice to broadband, transforming the intercarrier compensation system, and unleashing more spectrum for wireless broadband. But as technology transitions continue, much work remains, which is why Chairman Genachowski created the FCC’s Technology Transitions Policy Task Force in December.

Last week I spoke at the University of Colorado's Silicon Flatirons Center about the FCC in a time of technology transitions. I emphasized that technological transitions do not change the values Congress codified in the Communications Act, and that the FCC remains committed to advancing a set of core principles rooted in those values.

What are those principles? For the Tech Transitions Task Force, the following are key:

The Consumer Affairs and Outreach Division of the Consumer and Governmental Affairs Bureau serves as the FCC’s face with the American public. One of my recent outreach assignments was to deliver a presentation to the monthly forum of the Lifetime Learning Institute (LLI) of Northern Virginia, which provides continuing education opportunities to older Americans at the Annandale Campus of the Northern Virginia Community College.

Older Americans are an important group for the FCC to reach since we believe that access to high-speed Internet service – broadband – can improve the quality of life for all Americans. But many of the older Americans we routinely interact with are less likely than the rest of the country to subscribe to broadband, own a computer, or have the skills that are needed to use the Internet – commonly referred to as “digital literacy” skills. In addition, we find that many older Americans don’t believe the Internet is relevant to their daily lives and are concerned about taking on new expenses when living on low or fixed incomes. Vision and hearing loss or other challenges can make it difficult for older Americans to use a computer, and adaptive technologies pose a steeper learning curve. Many older Americans are also concerned about possible fraud and identity theft in cyberspace.

But research shows that once older Americans learn how to use the Internet, they quickly begin using email, going online to do research, make appointments, shop, take courses, manage bank accounts and electronic medical records, and communicate with friends and family – increasingly through social media sites and techniques. Older Americans are also buying more cell phones, using e-readers and tablets, and adapting to advances in telemedicine. I was heartened to find out that the Annadale group was very tech savvy!

Although broadband adoption has increased in recent years, one-third of the country is still without home access. With nearly 80-percent of teachers assigning Internet-based homework, a high-speed connection to complete school assignments is a necessity, not an option. We need to ensure that all Americans can easily access broadband internet in their homes. The gap between families that have home access and those that are beholden to free access points must be closed.

Within the next decade, it’s estimated that nearly 80 percent of jobs will require digital skills. Already, more than 80 percent of Fortune 500 companies, from Walmart and Target to Best Buy, require online job applications.

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Last Thursday, Chairman Genachowski and Secretary Donovan announced that HUD will join Connect2Compete’s (C2C) digital literacy coalition of libraries, non-profits, and for-profits as a digital literacy outreach partners. HUD and C2C are currently holding a successful digital literacy training curriculum pilot at HUD sites in Macon, Ga., Cook County, Il., and San Diego, Ca.

HUD serves approximately 4.5 million families across the country. As a coalition member, HUD staff and volunteers will work with public housing authorities, multifamily owners, Native American housing, and other HUD-funded organizations to raise awareness on digital literacy training opportunities and encourage eligible families to register for discounted high-speed Internet and laptops. Chairman Genachowski announced a similar partnership between C2C and the Department of Labor in July.

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